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She was born in New York City, the youngest of three children of Eugene and Florence Allen. Her father was a police lieutenant in Yonkers,[1] where she was raised.

Allen was very shy as a child, so her mother enrolled her in dance classes at age 4. She attended the High School of Performing Arts, where she trained for a dancing career, and then attended Jose Quintano's School for Young Professionals.

She and Brian De Palma were married on January 12, 1979, and for the next couple of years Allen appeared in his films. She starred as Kristina in Home Movies (1980) with Kirk Douglas, as Liz Blake in Dressed to Kill (1980) with Michael Caine, and as Sally Bedina in Blow Out (1981) opposite John Travolta. In filming the latter, she had to overcome a lifelong fear of being trapped in a submerged car that is filling with water.[3]

She married comedian Craig Shoemaker on September 6, 1992. Allen played Officer Lewis a third time in RoboCop 3 (1993) and was nominated for a Saturn Award for Best Supporting Actress. For her third performance as the feisty cop, she worked to soften the usually tough-as-nails demeanor of the character: "You do your job and you become more confident with yourself. Therefore, you don't have to prove yourself to anyone and basically deny your womanhood. (It's) not a dirty word. It's actually an asset. And that's what I wanted to show - to loosen her up in that way." [6] The same year, Allen also appeared with Linda Fiorentino in Acting on Impulse. She and Shoemaker divorced in 1994.

In December 2010, Nancy Allen was named Executive Director of the weSPARK Cancer Support Center, which was founded by her longtime friend and I Wanna Hold Your Hand co-star, actress Wendie Jo Sperber, and attended the annual Wendie Jo Sperber Celebrity Golf Classic. Of her work at weSpark, she said: "That is what I do. That is what my life is dedicated to. I’m there, I run it. I’ve created the whole program format and I fund raise. It is my life’s work".[7]